[143 Pages Report] The optical encryption market was valued at USD 2.53 billion in 2017 and projected to reach USD 4.24 billion by 2023, at a CAGR of 8.9% during the forecast period. Emerging requirement of regulatory compliances, growing concern over data security and privacy due to cyberattacks, and rising data center deployments are the major driving factors for the market.

Years considered for this report are as follows:

2017: Base year

2018: Estimated year

2023: Forecast year

20182023: Forecast period

The objectives of the report are as follows:

To define, describe, segment, and forecast the global optical encryption market, in terms of value and volume, based on encryption layer, data rate, vertical, and geography

To forecast the market size, in terms of value, into 4 main regions: the Americas, Europe, Asia Pacific (APAC), and Rest of the World (RoW)

To strategically analyze the micromarkets1 about the individual growth trends, prospects, and contribution to the market

To provide detailed information regarding the major factors (drivers, restraints, opportunities, and industry-specific challenges) influencing the growth of the market

To analyze opportunities in the market for stakeholders and the details of the competitive landscape for leaders in the market

To provide a detailed overview of the value chain in the market

To analyze competitive developments such as expansions, mergers & acquisitions, and product launches, along with research and development (R&D) in the market

To strategically profile key players of the market and comprehensively analyze their market ranking and core competencies

The research methodology used to estimate and forecast the optical encryption market begins with capturing data on key vendors through secondary sources such as The Optical Society (OSA), IEEE Communications Society (ComSoc), The Fiber Optic Association, and Journal of Optical Communications and Networking. Moreover, vendor offerings are also considered to determine the market segmentation. Top-down and bottom-up procedures have been employed to arrive at the overall size of the market on the basis of the revenues of the key players in the market. After arriving at the overall market size, the overall market has been split into several segments and subsegments, which have been verified through primary research by conducting extensive interviews with key officials such as CEOs, VPs, directors, and executives. The market breakdown and data triangulation procedures have been employed to complete the overall market engineering process and arrive at the exact statistics for all segments and subsegments. The breakdown of the profiles of primaries is depicted in the following figure:

This report provides valuable insights on the optical encryption ecosystem, which includes raw material suppliers, original equipment manufacturers (OEM), system integrators, suppliers and distributors, and end users. Ciena (US), ADVA (Germany), Nokia (Finland), ECI Telecom (Israel), and Cisco (US) are among the major OEMs of optical encryption devices. The system integrators include various optical encryption-enabled network equipment manufacturers such as Cisco (US), Nokia (Finland), Ericson (Sweden), Huawei (China), and others. End users of the market include long haul and metro service providers such as Verizon (US), AT&T (US), and China Mobile (China); data center owners such as Microsoft (US), Google (US), and Facebook (US); cable operators and multiple system operators such as Time Warner Cable (US), Masergy (US), and Vodafone (UK); mobile operators such as Deutsche Telekom (Germany), Telefonica (Spain), and Orange (France).

The study answers several questions for the stakeholders, primarily, which market segments to focus on in the next 25 years (depending on the range of the forecast period) for prioritizing the efforts and investments.

Report Scope:

In this report, the optical encryption market has been segmented based on the following categories. Additionally, the industry trends have also been detailed in the report.

The optical encryption market is expected to grow from USD 2.77 billion in 2018 to USD 4.24 billion by 2023, at a CAGR of 8.9% between 2018 and 2023. The growth of this market is driven by emerging requirement of regulatory compliances, growing concern over data security and privacy due to cyberattacks, and rising data center deployments.

Layer 3 encryption accounted for the largest share of the optical encryption market in 2017. Layer 3 encryption is widely used and accepted for internet-based virtual private networks (VPNs). Many large-scale IPsec deployments are currently in operation across enterprise and government networks. It provides seamless security to application and transport layers and can be applied to networks of all sizes from local area network (LAN) to wide area network (WAN). The market for Layer 1 is expected to grow at the highest CAGR during the forecast period. The reason for this growth is the advantages such as reduced cost, lower latency, high bandwidth efficiency, improved performance, and high availability, offered by Layer 1 encryption.

The greater than 10G and less than 40G data rate segment accounted for the largest share of the market in 2017. This can be attributed to the large-scale adoption of the optical encryption in different verticals such as BFSI, government, healthcare, and energy and utilities where the average data rate transfer is in the range of 10G and 40G. The market for greater than 100G optical encryption is expected to grow at the highest CAGR during the forecast period. This growth can be attributed to the requirement for encryption rates to align at speeds beyond 100G for any packet size so as to meet the demand for increased bandwidth driven by cloud services, mobile devices, and massive increases in video traffic.

The banking, financial services, and insurance (BFSI) vertical accounted for the largest share of the market in 2017. The optical encryption is being increasingly deployed by the BFSI sector to protect their customers, meet government and industry data security compliance standards, facilitate security auditing, and avoid reputation damage caused by data breaches. The optical encryption market for the data center and cloud vertical is expected to grow at the highest CAGR during the forecast period. Data centers play a crucial role in delivering IT services and providing storage, communications, and networking to a growing number of networked devices, users, and business processes in general. The growing importance of data analytics has boosted the value and growth of data centers.

The Americas accounted for the largest share of the optical encryption market in 2017. The high adoption of cloud-based applications in the Americas has led to a dramatic increase in the number of cyberattacks, which are also becoming more sophisticated. The optical encryption market in APAC is expected to grow at the highest CAGR between 2018 and 2023 owing to the extension of the network in China, Thailand, Malaysia, South Korea, India, and other developing countries in APAC. APAC is the largest producer as well as consumer of smartphones, laptops, televisions (TVs), and various other data-generating devices across the world.

The introduction of several advanced protocols and platforms, and consistent need for a compact network have resulted in the growing use of connectivity integrated circuits (ICs). However, as hardware and software both play a key role in emerging infrastructures, such as IoT and adoption of open-source platforms through the cloud, the network demands more compact equipment. The current network infrastructure is fragmented and focuses more on domain-specific growth than a consumer-centric joint approach. Thus, companies need to adopt an innovative and network-oriented approach to minimize network complexity; this is a factor restraining the growth of the market

Major players in the optical encryption market include Ciena (US), ADVA (Germany), Nokia (Finland), ECI Telecom (Israel), Cisco (US), Huawei Technologies (China), Microsemi (US), Infinera (US), Arista Networks (US), and Acacia Communications (US). Most of the leading companies have followed the inorganic strategy of contracts to boost their revenues.

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